Question

Problem 2-13 (LO2.4) Brenda plans to reduce her spending by $85 a month. What would be the future value of this reduced spending over the next 10 years? (Assume an annual deposit to her savings account, and an annual interest rate of 4 percent.) Use Exhibit 1-B. (Round time value factor to 3 decimal places and final answer to 2 decimal places.) Future value References eBook &Resources Worksheet Difficulty: Basic Problem 2-13 (LO2.4) Learning Objective: 02-04 Connect money management activities with saving for personal financial goals.

Answer 1

Future Value of the Amount = Present Value (1+ Interest Rate)^{No of years}

Year	Amount	No of years Interest Due	Interest Rate	Compounding Rate (1+ Interest Rate)No of years	FV of Amount
1	1,020.00	10	4	1.480	1,509.85
2	1,020.00	9	4	1.423	1,451.78
3	1,020.00	8	4	1.369	1,395.94
4	1,020.00	7	4	1.316	1,342.25
5	1,020.00	6	4	1.265	1,290.63
6	1,020.00	5	4	1.217	1,240.99
7	1,020.00	4	4	1.170	1,193.26
8	1,020.00	3	4	1.125	1,147.36
9	1,020.00	2	4	1.082	1,103.23
10	1,020.00	1	4	1.040	1,060.80
				Total	12,736.08